Good ERP Comes In Small Packages

11/30/1998

DCI And Baan Downsize Enterprise Resource Planning

With industry reports of around $4.7 billion being spent on ERP education and trainingthis year, small company IT managers are wondering how to deploy ERP solutions comparableto those found in larger companies. Can they succeed with smaller scale investments and ado-it-yourself approach? DCI did.

Digital Computer Integration Corp. (DCI; Plano, Texas) recently completed itsdeployment of a full suite of integrated "solutionware" for manufacturing,distribution, finance and enterprise management. And in record time (11 weeks). Using arealistic budget for this $20 million company, DCI's most serious challenge forsignificantly improving the accuracy of sales bidding and project cost forecasting wassuccessfully implemented. And it also equipped DCI for other, far-reaching benefits notpreviously possible -- without more costly solutions.

DCI sales were booming and product development evolving and expanding rapidly. Yetprior to the May 1998 implementation of Baan's Machine Building Industry solution(installed on a HP LX Pro NetServer), the company suffered internally from all thesymptoms of an outgrown IT system. At any given time, DCI personnel track as many as adozen orders at once, involving over several thousand parts, in order to meet deliveryschedules or make order commitments and cost forecasts or reports. All these concurrentuser processes are supported on the HP LX Pro NetServer.

Rack And ReadyLess than ten years old, DCI blends off-the-shelf UNIX and PC computer hardware withits own technology for "ruggedized" portable and rack-mounted computing systemsused in military or commercial aircraft, ships and submarines, all-terrain vehicles, aswell as industrial and other field environments. Though small in comparison to some of thecompany's computer manufacturing partners, DCI is preeminent for making these computerswithstand 25g shocks and operating in temperatures from -200C to 500C(-40F to 1220F).

"Our sales people continued to make bids on projects based on prior experience,but as customers required new and different products they did this with decreasingconfidence in the accuracy of their bids," observes DCI sales executive Greg Gray. Adecade-old accounting package with rudimentary inventory control hogged IT resources tothe point where intercom announcements would periodically ask the IT staff to logoff fromthe system so a particular program could be run. Worse, there were no tools for managersto use for tracking costs accurately, no information for analyzing project status on theshop floor, no automated way to track inventory.

It was becoming too easy for the company to lose money by underbidding or lose projectsby overbidding. The company's early, informal management controls were rapidly losingeffectiveness due to its growth and increasing product sophistication. "And virtuallyeveryone in the company, not just those in sales and management who faced pre-existinglimitations, knew we also faced a Year 2000 compliance problem," according to DarinDannelly, DCI's software business development director. "In early 1998, with a twoyear cushion, the management group began addressing the issue in earnest."

As discussions of the Y2K issue progressed, the "wish list" of desirable newsystem features grew. The six-person steering team rejected any kind of quick programmingfixes for Y2K, seeking more sophisticated solutions instead. The team reviewed severalbig-name, tier-one ERP packages-and immediately recoiled in sticker shock. The investmentwas simply larger than a relatively small firm could justify.

Yet DCI's product capabilities were increasingly sophisticated and the company hadspecific needs and improvements in mind to automate, integrate and streamlinemanufacturing, distribution and finance. Should the team go to two-tier or three-tier?Those packages would perhaps not be so complex, but might still improve dramatically uponthe current system -- at a more palatable price.

Meanwhile, Baan Midmarket Solutions (BMS) had been experimenting with taking the valueof Baan's ERP software for large companies and making scalar and modular adjustments toaddress the needs of the medium- and small-sized companies. Says Dannelly, "the greatchange and innovation that earned particular attention at DCI was the ready-to-run,pre-configured business process templates tailored to specific vertical markets."

DCI became a pilot site for the Machine Building Industry solution and implemented itas a Baan-on-Board solution, on the HP NetServer platform and Microsoft SQL Serverdatabase. DCI also took advantage of Baan's concept for streamlining deployment throughDynamic Enterprise Modeling (DEM).

DEM is "orgware" that DCI used to model its organization and match businessprocesses throughout all departments to the machine industry solution. The certifiedsolutions benefit smaller companies, both in reducing the cost of the application andassuring successful implementation, in a much shorter time.

Indeed, less than 12 weeks for implementing an enterprise application is extraordinary,especially compared to media studies of other solutions taking as long as two years. Eventhe customary deployment cycle of five to seven months can be an excessively high barrierfor DCI and other comparably sized companies that simply cannot delay IT improvements anylonger.

DCI began by activating and becoming accustomed to key portions of the package fordistribution, manufacturing and finance. Distribution encompasses sales, ordering,purchasing and inventory, among other pieces. For the first time, the sales force cancreate customer quotes that can be promptly and automatically integrated into a completesales order. A typical point of potential order delay and manual keying errors (from theformer independent spreadsheet quotes to separate-system order) is eliminated.

BAAN MOTS

A component of the certified solution deployed by DCI is the Baan application server, a HP NetServer LX Pro with four-way CPU, configured with 24GB of disk space (mirrored) and 500MB of RAM. "Because DCI's minute-by-minute processes in all departments revolve on the hardware," notes Greg Gray, "the choice of hardware didn't go unnoticed, not even in the sales group. It also minimizes administration costs."

DCI selected the Microsoft SQL database. Full Baan-on-Board features include processes and tools for sales, development, manufacture, delivery and maintenance of machine products. The integrated planning tool supports accurate and much improved control over production processes. An additional HP LX Pro supports Novell network applications.

The former inventory system could produce a list of parts and quantities, but withoutany reference to where the parts were -- whether on the receiving dock, shipping dock,store room or production floor. Now, inventory is tracked through precise location. Thenew system of bills and materials tracks receipt through where goods are beingmanufactured to point of shipping; even quality control checking is now an automated partof the system.

One of the most significant benefits to DCI has been the ability to standardize costson their products as never before. Instead of sales people talking to engineering and shopmanagers to price a new product and estimate production timing -- an "ad hoc,"lengthy and inexact procedure -- the system information is at their fingertips. The salesforce can now go out to customers and sell the products.Product costing is more accurate. The process forced engineering and production toimprove their precision in scoping and tracking operations, labor and parts going throughthe system. Formerly hidden costs in the production cycle (redesigning, warehouse costs,materials replacement) are now being assigned to the products where they belong.Time-to-build variances can now be analyzed and rates for different tasks and work centerscan be changed, so that routing for a particular product can be created with the mostaccurate costs.

The sales force now knows in advance precisely what products they are selling, what themargins are and what their commissions will be. They are much more comfortable going intoa sales situation knowing they will likely not underbid or overbid.

Manufacturing, planning and forecasting used to be a simpler, informal process, basedon prior experience. Today, the distributed nature of operations and attention toprofitability catalyze improvements. So, small companies can use ERP solutions andaccomplish IT transformations as adeptly as the largest corporations.